The problem with private provisioning of public goods

… is that private players who are providing those goods have an incentive in blocking attempts by the public sector to provide those goods. For the purpose of analysis, let us take the example of Gurgaon, both because I’m reasonably familiar with it and because it has been in the news in the international media thanks to a recent profile of the city by the New York Times.

Now, Gurgaon has a major problem with power supply. It is said that (I don’t have first hand info for reasons you’ll soon understand) the “city” faces about four to six hours of regular power cuts every day. I don’t know the exact reasons for it (surprisingly, Haryana sells power to other states so it appears there is no power deficit per se in the state), but it could be a pricing issue, with free power for farmers and all that. Anyway, the reason for the power cuts doesn’t matter so much.

In reaction to this, apartment societies have taken it upon themselves to provide “power backup” to the residents (for a fee of course). Even in that, there are three grades. I used to live in a DLF complex that had “one hundred per cent power backup”, which meant that I was assured of 24/7 power supply. Every time there was a power cut, the generators would start in a matter of a few seconds, and with “one hundred percent backup”, I could run just about any device on the “backup” power supply. In return, I would pay the apartment association six rupees per unit (as opposed to 3 rupees I pay here for sarkari power in Bangalore).

Then, there as “eighty percent backup”, in which you could use the generator-power supply to run all appliances except air-conditioners and geysers (both extremely important in Gurgaon given the weather). Then, there was another level with fifty percent backup, though I didn’t particularly understand it. The individual houses in the city, though, had no backup, and people living there had to make do with inverters.

Now, suppose that magically Haryana were to become a power surplus state, would the state government be able to provide uninterrupted three phase power supply to Gurgaon? I would think not, for there are several “private players” in that city whose source of profits and wealth is derived from the fact that they provide backup power supply. Think of all those people who invested in DLF flats because they had “one hundred percent power backup”. Now, with power backup not being a distinguishing factor, these flats will lose in value since they cannot command the same kind of premium as they used to (rather, the supply of “apartments with assured power supply” goes up, thus reducing demand for the only ones that offered this luxury earlier). Then, there are scores of generator and inverter dealers in Gurgaon, who again depend on the power shortage for their livelihood. And so forth.

It doesn’t appear as if Haryana has power shortage any more (recently, Karnataka bought power from that state to tide over its power crisis). However, there are enough powerful lobbies in Gurgaon who depend on power cuts (!! ) for their income and wealth, and it appears they have managed to lobby the government there (officially or unofficially) to block the provision of assured power supply. The moral of this story is that once “public goods” start being provided by private players, it is hard to displace them, and this results in a lifetime of inefficiency.

Expat Living

When you live in a city other than the one you’re comfortable living in, and if you have a lot of disposable income, you try to live like an expat. By that, I mean you will try and use your disposable income in order to insulate yourself from the parts of the city that you’re uncomfortable with. You basically try to take the city out of your lifestyle, and try and live in a way that wouldn’t be different from the way you’d live in any other city.

So for example, two years back I had to relocate to Gurgaon since my well-paying job took me there. And I knew that water supply, electricity supply, security and public transport were major issues there. So the first thing I did when I got there was to find myself a comfortable apartment with assured water supply and “100% power backup”, with round-the-clock security. I also transported my car to Gurgaon to hedge against the bad transport system there. All shopping was done in malls, so I could avoid the heat and dust, and the unreliability of the traditional markets there. As long as I wasn’t driving on those roads in my air-conditioned car, I could have been living just about anywhere else. I had tried my best to take Gurgaon out of my life.

You find people like this wherever you go, except perhaps Bombay (where the cost of living is so high that very few people have “disposable” income), but is perhaps more pronounced in Gurgaon where there are few natives with disposable income so most of the people you’ll meet turn out to be fellow-expats. So essentially a lot of your income goes in just hedging yourself against the city.

Like in Bangalore, you’ll find that “expats” always want to take a “Meru cab” wherever they’ve to go, while us native folks prefer to take the humble auto. I don’t blame the expats – they are yet to learn the skills required in finding an auto here that will take you where you want at a “fair” price, so instead of choosing to learn the system, they get around it by using their disposable income. “Expats” usually shop in malls, try and travel only to those places where they can easily take and park their cars, live in the outskirts where they can get big houses with “amenities” like the one I had in Gurgaon, send their kids to “international schools”, and the like.

So this tendency to live like an expat shows up the cost differential between living in your “own” city, and living in another where you would rather prefer to buy your way around the parts you don’t like rather than trying to blend into the city. And this tendency to live like an expat means that expats will always be expats, which is an accusation (not unjustifiably) thrown at the Koramangala types.

When I returned to Bangalore from Gurgaon about two years back, the thing that struck me was about how comfortable I suddenly was. So many of the worries that had been worries in Gurgaon ceased to be worries now. I was comfortable enough with the system to not bother about any of those. And as I ran across my road and jumped on to a moving bus to take me to the city centre, I realizeed I was back, where I belonged.

The Teacher’s Village

Allen A D Rodrigues: 3 months
Krishna R Sundaresan: 6 months
Sangeet Paul Choudhry: 5 months
Vamshi Krishna R: 6 months
Karthik S: 10 months
Sriwatsan K: 3 years

Ok so this is a list of South Indian boys who got lured by the thought that “Gurgaon is a metro” or “Gurgaon is cosmopolitan” or as one of my grandaunts once put it “Gurgaon is like America”, and made their way North, only to realize that Gurgaon is actually a Gaon and not really fit for living in, and opted out. You will notice an outlier in the above data – Sriwatsan K  – and that is a result of him being married to a Punjoo.

By all absolute standards it is a horrible place – no public transport (save for the metro that’s just come up), hell, no autorickshaws, no proper water supply, no proper shops, unsafe roads and all that. Face it, it’s not a city. The only “advantage” that it has, if you could call it that, is that it is less than an overnight train journey away from most of the cow belt, and is hence attractive for educated boys and girls from the said area who don’t want to venture out too far.

Another major thing for these people is that Gurgaon represents a major “level up” for compared to the quality of life in their home towns (not talking about Delhi here; and Delhi, I think, is a wonderful city). Large houses, tap water, air conditioning, 100% power backup and the works.

And if you were to notice, there is no other city or town within some twenty hours of Gurgaon where there is substantial modern “industry” – the kind of industries where college educated people of nowadays will want to work in (IT/BPO/whatever). So, most people who do come to stay in Gurgaon, do so because it is close to “home”. So that they don’t need to live like “the_amit”s in Bangalore or Chennai. And that they can live in a land that celebrates Holi (need to write sometime about how uncivilised a festival that is, or I might already have) and Rakshabandhan.

So, most people who live in Gurgaon think it is a privilege to be living there, and wouldn’t really think of moving out. Hence, employers tend to consider them to be sticky and hence don’t make an effort to retain them and stuff.

Now, for South Indian boys from urban centres (like the ones named in the beginning of the post), Gurgaon represents a major level down in terms of standard of living. And hence, when they go there, they expect the job to compensate for it. And in most cases, given that employers are tailored to thinking that the employees WANT to live in Gurgaon, this ends up not being the case. And that leads to disappointment and hence the short shelf life of South Indians in Gurgaon.